It was a busy day for Jack Dorsey yesterday. As well as turning in a surprising jump in users and profits, the Twitter CEO was called in to the White House for a dressing down from President Donald Trump who was in a huff about not having enough followers.
Trump had laid into Twitter earlier, complaining that it was “very discriminatory” and limited the number of people who were able to follow him:
They don’t treat me well as a Republican. Very discriminatory, hard for people to sign on. Constantly taking people off list. Big complaints from many people…over 100m [followers] but should be much higher than that if Twitter wasn’t playing their political games. No wonder Congress wants to get involved - and they should. Must be more, and fairer, companies to get out the WORD!
For the record, as of today, @realdonaldtrump has 59.9 million followers; @barackobama has 106 million.
The meeting with Dorsey in the Oval Office seems to have been conducted civilly, with the CEO tweeting afterwards:
Twitter is here to serve the entire public conversation, and we intend to make it healthier and more civil. Thanks for the discussion about that.
But then Dorsey had good reason to be in a good mood after surprising Wall Street with a rise in user numbers that no-one was expecting, Monthly active users rose from 321 million in Q42018 to 330 million for Q1 2019. That’s still below the 336 million recorded at this time last year, but the direction of travel is going the right way for now.
Most importantly for investors, monetizable daily users now number 134 million, up from 120 million reported at the end of 2018. Revenue is up 18% year-on-year to $787 million, with advertising revenue accounting for $679 million. Profit was up 200%, fuelled by a tax break benefit, to $191 million.
So what’s caused this apparent - one swallow doesn’t make a spring etc - turnaround? Essentially, and in language that would resonate with Trump, it’s down to getting tough on trolls and Fake News, according to Dorsey:
We are taking a bunch of the burden away from the victims of abuse and harassment on our service.
The firm is throwing tech at the problem to tackle it before it occurs, he explained:
We have been applying a lot more machine learning and deep learning to everything on our system, but have been focusing a lot of our work on making sure that we recognize that everything that happens online has offline ramifications, and protect someone's physical safety above all else.
That is why we introduced a new and easy reporting process. To report private information that is shared on the platform, but we are now getting 2.5 times more private information removed with this new easier reporting process. Of all the tweets we take down every week for abuse of content, 38% of them are now practically detected by our machine learning models. This is a huge step as it was zero percent just a year ago.
Dorsey also ticked the necessary boxes in terms of public support for further regulation in the social media sector, with one caveat:
We are completely open to regulation where it makes sense. We do believe our role in a lot of these conversations that we have with leaders around the world, regulators around the world, is to help educate. Their job is to make sure they are protecting the individual, levelling the playing field and we need to help educate about what we are seeing within Twitter, any technology or secular trends that we believe are important so that we can help improve the industry.
Regulations like GDPR have been a net positive not just for our service, but also for our broader industry in general. It's added a lot more clarity around privacy and how data is being used to the people that we serve. So regulations like that we do believe are smart and beneficial to us and also our broader industry. And we will continue to look and work with regulators around the world to make sure that the regulation is crafted in the right way and that we can comply rather way.
As for the all-important ad revenue uptick, Dorsey argued that Twitter remains a compelling platform for reaching a wide audience:
Advertisers know that you come to twitter as an advertiser, because we have the most valuable audience when they are most receptive. They come with a specific campaign objective in mind. They come to launch something new. They come to connect with what is happening. And they know exactly what they are buying.
A goal now is to increase the direct response capabilities to advertisers, he added:
We have a successful mobile application promotion product, but we feel that we can do better there and we think we can do better across direct response over time. And so one of the two biggest endeavors for our revenue product team this year is continuing to improve the mobile application promotion products. So that when a car service or a game company is launching an app in a new country or a new app somewhere in the world, they come to Twitter to launch it just as somebody would to launch a phone or a movie or TV show.
We know that we can do more to drive better relevance for them to help them target the right audience. And as we do that work we believe we will create a better path for ourselves to more direct response. We know this is a place where advertisers want our help and look to Twitter and we know that there is more that we can do for them over time. But this is going to be a rolling thunder, not a big reveal where you will see ongoing improvements from us as opposed to something that happens all at once.
The question of relevance is also one that’s applicable to the type of content that users see. Again, this is an area for improvement, said Dorsey:
We want to make sure that we are looking at what people are following and following our interests based on that. So you may not be following a particular account that is broadcasting live content, but associated with the live content. So for instance, with basketball, you might be following an associated basketball account, whether it be a player, or players mom, or a team, or a particular sports commentator. Based on those signals, we can put that live event right at the top of your timeline, and we are doing more and more of that.
We also are utilizing ‘explore’ more, so that when we don't have signal on what you might be interested in terms of live content, you can go over to ‘explore’ and you should be able to see all the live events right there at the top of explorer within moments are trending hash tag.
So our default is to make sure that we are enabling people to see what they will be interested in, based on who they follow. But this really speaks to our broader strategy of eventually making it easy to follow an event, a topic or an interest as it is today to follow an account. So that is over the longer term. And we will be able to much more directly match your interest to live content that is happening on the service.
As noted above, one good quarter doesn’t mean Twitter’s problems are at an end, but it was certainly a positive indicator. The clampdown on abuse and fake accounts clearly had some proof points, although ironically the purges were also responsible for agitating the Presidential ire as he has lost hundreds of thousands of ’followers’ in the process. Facebook’s due to report its latest numbers later today. Dorsey’s good day sets a useful benchmark for whatever Mark Zuckerberg has to tell us.